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What to watch: Aggreko agrees to £2.3bn takeover, oil hits 14-month high, LSE bullish about future prospects

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LaToya Harding
·Contributor
·5-min read
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TO GO WITH AFP STORY BY CHRISTOPHE KOFFI
Experts of the Organisation for Economic Co-operation and Development (OECD) inspect equipment supplied by Aggreko at an electricity plant on the outskirts of the Ivorian capital Abidjan, on September 5, 2014. Aggreko is a leading rental company, supplying equipment for power and temperature control for temporary electrical energy. AFP PHOTO / SIA KAMBOU        (Photo credit should read SIA KAMBOU/AFP via Getty Images)
The acquisition at 880p per share represents a substantial 39% premium to Aggreko’s closing price of 645p when the deal was first announced last month. Photo: SIA KAMBOU/AFP via Getty Images

Here are some of the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world.

Aggreko agrees to Albion Acquisitions takeover

Power generator company Aggreko (AGK.L) has agreed a private equity takeover worth £2.3bn ($3.2bn) from a consortium led by Britain’s TDR Capital, which is buying Asda with the billionaire Issa brothers, and Florida-headquartered infrastructure fund I Squared Capital.

The acquisition at 880p per share represents a substantial 39% premium to Aggreko’s closing price of 645p when the deal was first announced last month.

Ken Hanna, chairman at Aggreko, said: "The Aggreko board believes that the offer from I Squared Capital and TDR Capital represents an attractive price in cash that fairly recognises Aggreko's future prospects.

"We believe that the business, its people and customers will continue to be well supported with I Squared Capital and TDR Capital as shareholders bringing their expertise in energy and rental markets to support our existing strategy."

Aggreko is the latest in a string of UK-quoted companies, such as G4S (GFS.L) and Signature Aviation (SIG.L) that have recently fallen into the hands of private equity firms.

The deal is expected to close during the summer, subject to investor and regulatory approval.

Shares rose 1% on the back of the news.

Shares rose on the back of the announcement. Chart: Yahoo Finance
Shares rose on the back of the announcement. Chart: Yahoo Finance

European stock markets continue to tumble

European stocks fell at the open on Friday amid fears of a rise in interest rates and a continued rotation out of growth stocks into the likes of industrials.

The FTSE 100 (^FTSE) fell 0.79% after opening, while the CAC (^FCHI) tumbled 0.94% and the DAX (^GDAXI) was 1.02% lower.

Traders were left disappointed last night after Federal Reserve chair Jerome Powell did not indicate that the Fed might step up purchases of long-term bonds to hold down longer-term interest rates.

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Richard Hunter, head of markets at Interactive Investor, said: “The Federal Reserve’s insistence that it believes these inflation moves are transitory was not enough to arrest a further spike in bond yields, as investors fretted that there were no plans to control the longer end of the yield curve.

“At the same time, the perceived threat of higher interest rates arriving earlier than expected washed through to the shares which could be most obviously affected by the resultant slowing of profits.”

Oil hits 14-month high

Oil prices climbed to their highest level in nearly 14 months on Friday after the Organisation of Petroleum Exporting Countries (OPEC) and its allies agreed to mostly maintain their supply cuts for April.

Brent crude (BZ=F) rose to as much as $68 a barrel, a level not seen since 8 January, while US crude hit $64.80 a barrel.

An increase of 500,000 barrels a day was widely expected, however, Saudi Arabia agreed to maintain a voluntary 1 million barrels per day cut despite calls from some smaller producers to allow a modest loosening.

Brent crude prices, 5-day chart. Chart: Yahoo Finance
Brent crude prices, 5-day chart. Chart: Yahoo Finance

“This raises the very real prospect that the Saudis, in particular who favour longer curbs, could overplay their hand, and thus risking an element of demand destruction,” said Michael Hewson of CMC Markets.

“The surge in prices could also speed up the transition towards renewables if the price rises much above $70 a barrel for an extended period. It’s a bit of a gamble on the part of the Saudis, as they could hasten their own demise in a faster move towards renewables, as well as risking the strength of any post pandemic recovery.”

Russia was allowed a 130,000 barrel a day increase in quota and Kazakhstan 20,000.

The group is awaiting a more solid recovery in demand from the coronavirus pandemic despite a recent rally in oil prices in the past two months.

LSE bullish about future prospects

The London Stock Exchange Group (LSEG.L) is bullish about its future prospects, despite rising international competition and the politicisation of finance post-Brexit.

The LSE e reported its 2020 results on Friday, showing revenues rose by 3% to £2.1bn ($2.9bn) last year. Capital market revenues were flat but income from information services rose by 3% and post-trade clearing revenues jumped by 7%.

Total income was up 5% to £2.4bn in the 12 months to 31 December 2020. Operating profit rose 3% to £755m. The company hiked its final dividend by 7% to 75p per share.

Barclays Capital said the results were "robust" and in-line with City forecasts.

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"The COVID-19 pandemic and broader geo-political events presented unprecedented challenges in 2020," chief executive David Schwimmer said in a statement.

"Despite this environment, and with the vast majority of employees working remotely across our global locations, LSEG has delivered for its customers and provided a strong financial performance, demonstrating strong operational resilience."

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